Thursday, July 17, 2008

Note - the 'full bottle' USRant is still not operational - there is no discussion of Bond markets yet - it's done, but needs testing for a day or so).

Well, the
moonshot in Financials continued apace - at least for the first few
hours of the session.

Today's fairy tale is that everything is just hunky-dory
because JPMorganChase 'beat the number'. Leave aside that 'the number'
had been hacked to death recently, and that JPMs share price ignores all the toxic sludge it is still hiding off-balance-sheet... so long as there is no last minute revelation that
the CEO had morphed into a radioactive lizard and started rampaging
through the streets of Manhattan, it's a good day for Financials.

Plus, for anybody who can look at a chart, you will see that the current explosion upwards has actually been driven by short covering - you don't get 150-point Dow moves in 45 minutes as a result of buyers, you get that sort of move when shorts have their goolies in a vice. Dollars will get you donuts that this weeks CoT shows a big reduction in small spec long positions in Oil and Platinum, and small spec shorts in the S&P and the Nasdaq100. (Of course I hasten to add that despite being a bear I was very specific about moving to the long side - just for a trade - two days ago within 4 points of what will end up being a very temporary swing bottom, Yay for me.)

Economic News

A moderately interesting dance-card as far as EcoData was
concerned... as with JPMorganChase 'beating (dramatically lowered)
expectations', the economic data is likewise having the hurdle dropped
so low that a crippled sea-cucumber could get over it (the hurdle, I
mean)

Building Permits for June rose to
1.1million, exceeding the 965k consensus and handily above the prior
month's 978k. That said, the number for June is roughly half the number
from early 2005. Likewise, Housing Starts for June
rose to 1.07m, well above the 960k consensus and the revised 977k
figure for May. Again, compared with June a year ago, the current
figure represents a 30-odd percent decline. But it's a month on month
plus, and it beat expectations (which are now being lowballed so badly
that you would be forgiven for thinking that they were forming
expectations about Bush's academic performance).

Initial Jobless Claims for the week
ending July 12th showed a sharp increase to 366k from the prior week's
348k... but the outcome was below those lower-than-low expectations
(which were supposedly looking for a read on of 380k); and finally

The Philadelphia Fed Index for June
came in at -16.3, well below the consensus guess of -15 (but better
than the prior reading of -17.1).

What to make of it all? Well, first start from the premise
that wherever you are on our little blue-green ball of rock, government
lies like a flatfish. Take it from there. Bad as these numbers are,
they are doubtless massaged to within an inch of their lives -
subjected to enhanced interrogation techniques, if
you will. I have no doubt that in the fullness of time we will discover
that the unreliability of US government stats is not limited to

hedonic adjustment of GDP and the CPI

substitution effects and chain linking in almost all price
indices,

concentration on 'core' inflation,

the CES Birth-Death Phantom Worker Generator

and the various other statistical chicaneries perpetrated
by the US government (and copied by governments everywhere)

And we now find that recent work shows that there is a life
expectancy gap between rich and poor in the US, of thirty
years. I doubt that you would have seen a disparity like that
in pre-Revolutionary France, or even in England at the time of Marx's
'satanic mills'; it is genuinely staggering, when you consider that
government is supposed to exist to ameliorate the failure of the market
to adequately provide for the poor and huddled masses. Thirty years?
Thirty years? You would be hard
pressed to find that sort of gap in any third world dictatorship - and
in such a case it would be something used to shame the government.

And if you think that's bad, then consider the difference in
life expectancy between Asian-American males and African-American
males... a life expectancy gap of FIFTY
years.

Now do not think that I favour some sort of socialised
intervention to put this sort of thing to right, Dear Reader; not a bit
of it. But it shows perfectly, that for an economy with the same Tax to
GDP ratio as Australia, the US government has got its priorities
completely back-asswards; rather than performing
such functions as are economically justifiable (basic healthcare, basic
welfare, basic education and territorial defence), the US government is
all about funnelling tax money to political cronies, and leaving
taxpayers with an increasing tab to pass to unborn generations. It's
easy to look rich when you get to spend roughly 7% more than you earn...

Fed Open Market Operations

The Fed's Open Market Operations desk performed 3 repurchase
operations:

a 1-day repurchase totalling $10.75bn, with none of it in
Treasury-backed collateral;

a 7-day repurchase totalling $7bn, all of it in
Treasury-backed collateral, with a weighted average rate of 1.964%;

a 14-day repurchase totalling $5bn, with not a skerrick in
Treasury-backed collateral.

Headline Indices

Insert material here

The Dow Jones Industrial Average
advanced 207.38 points (1.85%) to 11446.66 points. The index
high for
the day was 11446.66, while the low was 11209.56.

Of the 30 Down components, 23 gained ground for the day, with
total upside volume of 1.06bn units. 6 Dow components suffered losses
for the day, with total volume in declining index components of 142.61m
units.

The CBOE Volatility Index lost 0.09
points (0.36%) to 25.01 points. The CBOE Nasdaq100
Volatility Index
lost 0.29 points (0.96%) to 29.84 points. The index high for the day
was 30.66, while the low was 28.70.

A Total of 3490 issues traded today on the NYSE; today's total
volume was 2.56 billion shares. A total of 2503 counters posted gains
for the day, with aggregate volume of 663m shares trading to
the upside. Exerting downwards pressure on the index were the 929
losers, which accounted for a total volume of 1.75 billion shares
according to my data feed. (Note - that looks like a data
stuffup - a nearly 3:1 tilt toward LOSERs? Doubt it).

31 stocks made new 1-year highs on the NYSE, while 145 shares
plumbed new
52-week depths.

Over on the Nasdaq 3039 tickers traded today; total Nasdaq
volume was 2.63 billion shares. A total of 1993 stocks posted gains for
the day, with aggregate volume of 1.97 billion shares trading to the
upside. The red zone of the Nasdaq exchange was populated with 932
losers, which accounted for a total volume of 647.2 million
shares.